New Gillette CEO Offers Few Details

REUTERS

Gillette Co.'s James Kilts disappointed some investors Wednesday by issuing a lower-than-expected sales forecast and failing to sate their appetite for more information in his first meeting with analysts since becoming chief executive of the struggling razor maker in February.

Boston-based Gillette, whose sales have been stagnant for several years, has the potential to post 3% to 5% annual sales growth in the long term, Kilts said. Some on Wall Street were looking for at least 4% to 6% growth, in line with expectations for other major consumer products companies.

Kilts also frustrated analysts and investors by declining to be more specific on how long it would take to turn the company around and by sticking to Gillette's policy of not issuing earnings guidance.

"There's a lot of work to be done over the next six or nine months before earnings show any progress," said Tim Drake, consumer nondurable goods analyst at Banc One Investment Advisors, which manages Gillette shares in its portfolios. "I think he is talking about doing a lot of the right things and the programs he's putting in place are needed at Gillette."

Among programs Kilts mentioned were focusing on mid-level products such as disposable razors, the basic Duracell battery--which the company will rename CopperTop--and battery-powered toothbrushes. Those had been neglected for several years as the company focused on premium products.

During the presentation, Kilts repeated themes that have been true at Gillette for several quarters, including that the company has to get rid of excess inventories, increase advertising on products such as batteries and cut costs.

Though some analysts were disappointed with the lack of earnings guidance from Kilts, others said the strategy is appropriate for a consumer products company focused on long-term growth.

"It actually backs a company into a corner where they're in a no-win situation," said William Steele, consumer products analyst at Banc of America Securities.

Gillette shares fell 62 cents, to close at $28 on the New York Stock Exchange.

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